Apartments whose construction has begun, by quarter of year (photo: screenshot, Central Bureau of Statistics)
Freezing on the yeast?
Data published today by the Central Bureau of Statistics show that in the third quarter of 2022, the number of construction starts was 14,675 apartments - a decrease of 15.1% compared to the previous quarter, in which 17,293 construction starts were recorded, and of about 5% compared to the corresponding quarter last year, in which the construction of 15,482 began New apartments.
This is the lowest figure since the first quarter of 2021, and a 24% decrease from the record at the beginning of the year.
Despite the decrease, the number of construction starts in the last 12 months still exceeds the 70,000 start mark per year - a figure that reflects an increase of 15.6% compared to the previous 12 months (October 2020 - October 2021).
The decrease in construction starts joins other data indicating a significant slowdown in the housing market, in the shadow of interest rate increases, the decrease in the volume of transactions and the hope of young couples for a drop in prices, which makes them sit on the fence and wait for opportunities.
We were warned - this is bad news for the economy
The president of the Boni Ha'aretz Contractors' Association, Raul Sargo,
comments on this and claims that this is very bad news for the economy: "This is exactly what we were warned about. We presented data similar to the ones that are published by the MASS today in the media and the government already about two months ago.
The continued dramatic decline in the volume of construction starts is very bad news for the economy.
As we estimated, this decrease is primarily due to the extreme interest rate increase that the Bank of Israel chose to implement.
It brings with it a decrease in the ability of entrepreneurs and contractors to plan their activities and on the margins it is already evident the difficulty of entrepreneurs to approve bank loans and finance their activities in practice.
This bad news adds to the prolonged damage to the ability of home buyers to make purchases, in light of the jump in interest rates on mortgages.
Raul Sargo (Photo: Yehats)
Furthermore, Sargo says
that "the incoming government must act immediately to change the state of the housing market, which has become the biggest influence on the state of the entire economy. Temporary solutions, such as raising interest rates or announcing new lotteries for apartments, are a long-term danger to the Israeli economy. We in the association call on the Prime Minister and for the ministers to reach with us and the local government the package deal that we proposed, in which the supply of apartments will increase dramatically by the state selling land for 100,000 housing units in each of the next three years, the government will provide comprehensive financing of infrastructures that will allow local authorities to take in new apartments on a large scale and at the same time determine A complete stop to the price increase to which we, the entrepreneurs and the contractors, will be committed."
A positive point: a 23% annual increase in construction starts in urban renewal
Despite the decrease in general construction starts as mentioned above, from an analysis of the data on construction starts in the field of urban renewal carried out by the Urban Development and Renewal Company, it appears that in the months of October 2021 - September 2022, the construction of 11,592 units began, as part of eviction and construction projects, while in the corresponding period last year the construction of 9,602 began units -
so this is a significant increase of 23% during the last year.
The quarterly calculation also recorded a slight increase in construction starts, when in the third quarter of 2022 the construction of 2,813 units in evacuation and construction projects began compared to 2,681 in the second quarter of the year.
a 43% increase in the Central District;
In the northern and southern districts there was almost no change
When looking at the segmentation by geographic districts, it can be seen that in the Tel Aviv district there was an increase of about 15% in the last 12 months, when the construction of about 6,788 units began this year as part of evacuation and construction projects, compared to 5,905 units in the corresponding period last year.
An increase of 43% was recorded in the Central District, when the construction of 2,897 units began this year compared to 2,015 units in the corresponding period last year.
In Jerusalem, a significant increase of about 70% was recorded, and the construction of 519 units as part of demolition and reconstruction began compared to 305 units in the corresponding period.
In the Haifa district, on the other hand, no significant change was registered and the construction of approximately 730 units began. The same is true in the northern and southern districts, where in the southern district the construction of approximately 312 units began this year and in the northern district 331 units.
Construction starts as part of construction evacuation projects by district (photo: screenshot, Central Bureau of Statistics)
Nir Shmol, CEO of the Urban Development and Renewal Company
, noted that "the increase in construction starts in urban renewal is certainly encouraging, and I hope that the trend will continue even more strongly next year.
In my assessment of the situation today in the real estate market, the rise in land prices and interest rates will encourage entrepreneurs to continue investing in urban renewal. As long as the new government is able to remove barriers, give additional incentives to the local authorities, and will encourage urban renewal in areas in the north and south of the country as well - the rate of construction starts in urban renewal will continue to rise ".
Nir Shmol, CEO of the Company for Urban Development and Renewal (photo: Public Relations)
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